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[Congressional Record Volume 158, Number 113 (Thursday, July 26, 2012)]
[Senate]
[Pages S5488-S5493]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

           STATEMENTS ON INTRODUCED BUS AND JOINT RESOLUTIONS

  By Mr. HOEVEN (for himself, Mr. McConnell, Ms. Murkowski, Mr. 
Barrasso, Mr. Cornyn, Mr. Vitter, Mr. Thune, Mr. Blunt, Mr. Wicker, 
Mrs. Hutchison, Mr. Burr, Mr. Heller, Mr. Risch, Mr. Coats, Mr. 
Portman, Mr. Kyl, Mr. Sessions, Mr. Shelby, Mr. Inhofe, Mr. Cochran, 
Mr. McCain, Mr. Isakson, Mr. Crapo, Mr. Enzi, Mr. Roberts, Mr. Boozman, 
Mr. Coburn, Mr. Johnson, of Wisconsin, Mr. Chambliss, Mr. Johanns, and 
Mr. Lugar):
  S. 3445. A bill to approve the Keystone XL Pipeline, to provide for 
the development of a plan to increase oil and gas exploration, 
development, and production under oil and gas leases of Federal land, 
and for other purposes; to the Committee on Energy and Natural 
Resources.
  Mr. HOEVEN. Mr. President, I rise to discuss this comprehensive plan 
for energy security for our Nation.
  When I say ``energy security,'' I mean producing more energy than we 
consume. I believe, with this approach, within 5 to 7 years we can 
truly be a nation that is energy secure. Again, I mean producing more 
energy than we consume. This comprehensive plan for energy security is 
about truly producing all our energy resources in this country.
  Many of these bills in this package of Energy bills have already been 
passed by the House that we are introducing now in the Senate, as well 
as additional legislation--ideas that Senators have put forward that 
were adding to it as well.
  The approach is similar to the approach we have taken in North Dakota 
over the last decade. My home State of North Dakota has developed all 
its energy resources--both traditional and renewable--in a vigorous way 
over the last decade, and we are now an energy powerhouse for the 
Nation. We can see what we are doing in oil and gas, but we are doing a 
tremendous amount in all other forms of energy as well--both 
traditional and renewable. It is because we worked in a very inclusive 
way to include everybody's ideas in building a comprehensive energy 
plan that we call Empower ND--Empower North Dakota.
  There was no one person who came up this whole comprehensive plan or 
with all the ideas, but we reached out to everyone--all the different 
energy sectors--and said: Let's collaborate, let's work together, let's 
pass a comprehensive energy plan, and then let's keep improving it. 
Let's make it a process rather than a one-time product and keep adding 
ideas and bringing forth items that will help us spur and drive our 
energy development in the State, ideas that will create the kind of 
business climate that will truly empower private investment--private 
investment that will deploy the new technologies that not only produce 
more energy but do it with sound environmental stewardship. That is 
exactly what is happening in North Dakota, and that is exactly what 
need to do at the national level.
  This Domestic Energy and Jobs Act clearly demonstrates that we have 
an energy plan and that we are ready to go and that we are coordinating 
with our colleagues in the House as well. Right now there are 30 
sponsors for this legislation, including the Republican leadership, as 
well as the energy leaders.
  It also is a plan which has reached out to what the House calls their 
HEAT team--which stands for House Energy Action Team. Representative 
McCarthy and others, certainly Fred Upton, who is head of their Energy 
and Commerce Committee, Representative Hastings, and others who are 
truly energy leaders in the House--people whom I have worked with on 
things such as the Keystone Pipeline, Representative Terry and 
Representative Connie Mack and others.
  This is about getting people involved in an inclusive way and putting 
in place an energy policy that truly serves this Nation and empowers 
private investment. We see how important that is now.
  We have hundreds of billions of investment dollars waiting to be 
invested in producing more energy, more jobs, and more security for our 
country. This approach will empower private investment to develop all 
our energy resources. It does things such as reduce the regulatory 
burden, streamlines permitting--both onshore and offshore--and helps us 
develop vital infrastructure such as the Keystone Pipeline. It develops 
our resources on public lands, including our renewables, and setting 
realistic goals with a market-based approach, not picking winners or 
losers, and preserving multiple use on our public lands throughout this 
country. It would put in a freeze and require a study of rules that are 
driving up our gasoline prices.
  It also includes a bill from Senator Murkowski. It directs the U.S. 
Geological Survey to establish an inventory of critical minerals in the 
United States and to set policies to help us develop those minerals.
  What is the impact? The U.S. Chamber of Commerce, in March of 2011, 
undertook a study. In that study, they looked and determined there are 
more

[[Page S5489]]

than 350 energy projects that are being held up because of an inability 
to get permitted or a regulatory burden or other hurdles and 
roadblocks. In that study, they determined that if these energy 
projects--again, more than 350 energy projects--could be green-lighted, 
it would $1.1 trillion in additional gross domestic product and 1.9 
million jobs a year--1.9 million jobs a year just in the construction 
phase for those energy projects.
  So this legislation isn't just about energy for our country. It is 
about energy. It is about a comprehensive approach--more than 13 
different pieces of legislation, many of which have already passed the 
House. It is about a comprehensive approach to get development of our 
energy resources underway in a big way. But it is about job creation. 
It is about economic growth. It is about economic growth that will help 
us get the 13 million-plus people who are currently unemployed back to 
work. It is about economic growth that will help us generate revenue to 
reduce our deficit and our debt, and it truly is about national 
security.
  Look what is going on right now in the Middle East. Look what is 
going on in Syria, in Iran, in Egypt with the rise of the Muslim 
Brotherhood. Look at the instability. Yet we still depend on oil from 
the Middle East and places such as Venezuela. There is no need for 
that. We can produce our own energy and more. It is an interconnected 
world. We all know that.
  So when I talk about energy security, I mean producing more energy 
than we consume. That is what I mean by energy security. Of course, 
when there is an increased supply, what happens? It helps bring prices 
down. Think of the impact that has for families and for our economy.
  Just recently, in the last few days, a company called CNOOC out of 
China--which is essentially a Chinese Government-owned company--offered 
$15 billion to buy Nexen, a major Canadian oil company--$15 billion. 
Why did they do that? To buy energy resources in Canada, so China would 
own energy resources in Canada.
  As you know, I have been down on the floor many times, and I have 
worked very hard to get the Keystone Pipeline approved because if we 
don't produce and get that oil from Canada, somebody else will, and 
China is working to do just that.
  So after the administration held up the Keystone XL Pipeline, what 
happened? Canadian Prime Minister Harper went to China. There, he met 
with Chairman Wu and the other energy leaders in China and they signed 
an MOU or MOA, a memorandum of understanding/memorandum of agreement.
  In it, what did they say? They said China and Canada are going to 
cooperate on developing resources, energy resources in Canada. Of 
course, that energy then goes to China.
  The question we have to ask is are we going to work with our closest 
friend and ally, Canada, to develop things such as the Keystone XL 
Pipeline so oil will come from Canada to the United States rather than 
going to China.
  Or are we in this country going to be in a position where we have to 
buy our oil back from the Chinese? I know how the Americans want that 
question answered. That is what I am talking about. We need to be 
developing these energy resources in this country, and together with 
our closest friend and ally, Canada, we can do it.
  There is another important point to be made here. I know there are 
some opponents of developing the Canadian oil sands concerned about 
CO2 emissions. But here are some things they have to think 
about. Already you can see China coming in, working with Canada to 
develop those resources. So those resources are going to be developed. 
The question is, is that oil going to China or is it going to come to 
the United States?
  The point is this: By building pipelines, we not only bring it to the 
United States but we empower investment in the Canadian oil sands that 
will help us produce more energy but do it with better environmental 
stewardship. Eighty percent of the new development in the Canadian oil 
sands is what is called ``in situ,'' which means drilling instead of 
the excavation. That means lower CO2 emissions, that means 
emissions very much in line with what we produce now in the United 
States with our conventional drilling.
  We have an opportunity, an incredible opportunity. We need to seize 
it with both hands. As I say, we can be energy secure in this country 
within 5 years. I think when people look at what is going on in the 
Middle East, when they see our soldiers over there, when they see the 
instability that is being created by regimes like Syria or Iran, when 
they see what is going on in countries like Egypt and they understand 
there could be an event that closes the Strait of Hormuz, they 
understand what that would mean for oil prices and energy prices in 
this country.
  We do not want to be dependent on that situation, which means it is 
time to act. This is not about spending money; this is about generating 
jobs and generating revenue that will help us reduce our deficit, that 
will put our people to work, that will unleash the private investment, 
the entrepreneurship, the ingenuity of the American people to truly 
propel our Nation forward, to propel our economy forward, and to make 
us safer and more secure. The time has come to act. The House passed 
much of this plan with bipartisan support. We need to do the same in 
the Senate.
  This is not the end of the story. This is an important part, the 
foundation, if you will, of building the right energy story for our 
country. We can do it and I urge my colleagues to join me in this 
effort.
                                 ______
                                 
      By Mr. DURBIN (for himself, Mrs. Boxer, Mr. Merkley, and Mr. 
        Whitehouse):
  S. 3452. A bill to amend the Truth in Lending Act to establish a 
national usury rate for consumer credit transactions; to the Committee 
on Banking, Housing, and Urban Affairs.
  Mr. DURBIN. Mr. President, as our economy continues to recover, 
families across America are still facing financial hardships. Our 
priority to help working families must persevere, and we must protect 
them from future financial harm.
  Some have compared today's predatory lending practices to the 
subprime lending that caused the financial crisis in 2008. We need to 
free our financial system from these abuses and prevent consumers from 
never-ending debt traps.
  Today I am introducing the Protecting Consumers from Unreasonable 
Credit Rates Act to protect consumers from aggressive predatory lending 
practices. The bill caps annualized interest rates on consumer credit 
at 36 percent.
  Consumers spend over $30 billion every year on predatory payday 
loans, high-cost overdraft loans, and other forms of credit. Imagine if 
a portion of that $300 billion ten-year cost of credit could be 
redirected towards buying American goods and services.
  In an era that has called for trillions of taxpayer dollars to bail 
out banks and jumpstart economic demand, this proposal costs the 
taxpayers nothing. In fact, in the case of payday lending, it could 
potentially save billions of dollars in fees and interest paid by the 
12 million American taxpayers who use these products annually.
  The Protecting Consumers from Unreasonable Credit Rates Act would 
establish a new federal annualized Fee and Interest Rate calculation--
the FAIR--and institute a 36 percent cap for all types of consumer 
credit.
  In 2006, Congress enacted a Federal 36 percent annualized usury cap 
for certain credit products marketed to military servicemembers and 
their families, which curbed payday, car title, and other forms of 
credit around military bases. My bill would provide the same 
protections for all Americans.
  Although I hope to gain widespread support for this bill from 
responsible lenders, I understand that some of the financial service 
firms in this country will be uneasy with a broad bill establishing a 
high interest rate cap.
  There are those that will claim it is not possible to create a 
profitable, small-dollar, short-term loan with APR capped at 36 percent 
and consumer protections. However, there are financial institutions 
that currently offer access to quick credit through products with 
consumer protections and interest less than 36 percent. I hope with the 
introduction of this bill we can open an honest conversation about 
consumer credit rates and how it impacts American families.

[[Page S5490]]

  I would first start by asking what services these firms provide that 
can justify charging customers over 36 percent in annual interest. How 
do lenders in my home state of Illinois justify charging annual rates 
over 400 percent? In my opinion, there is no justification.
  Consider 66 year-old Rosa Mobley, who lives on Social Security and a 
small pension.
  The Chicago Tribune reports that Ms. Mobley took out a car title 
loan--a type of payday loan in which the borrowers put up their cars as 
collateral--for $1,000. Ms. Mobley was charged 300 percent interest.
  She wound up paying more than $4,000 over 28 months and at the time 
of the report was struggling just to get by.
  This bill would require that all fees and finance changes be included 
in the new usury rate calculation and would require all lending to 
conform to the limit, thereby eliminating the many loopholes that have 
allowed these predatory practices to flourish.
  It would not preempt stronger state laws, it would allow states' 
attorneys general to help enforce this new rate cap, and it would 
provide for strong civil penalties to deter lender violations.
  The Protecting Consumers from Unreasonable Credit Rates Act would 
eliminate predatory lenders, as well as would help borrowers make 
smarter choices.
  The Truth in Lending Act was enacted over 40 years ago to help 
consumers compare the costs of borrowing when buying a home, a car, or 
other items by establishing a standard Annual Percentage Rate that all 
lenders should advertise.
  My first mentor in politics, the late Senator Paul Douglas from my 
home state of Illinois, said all the way back in 1963 that too often 
lenders:

       compound the camouflaging of credit by loading on all sorts 
     of extraneous fees, such as exorbitant fees for credit life 
     insurance, excessive fees for credit investigation, and all 
     sorts of loan processing fees which rightfully should be 
     included in the percentage rate statement so that any 
     percentage rate quoted is meaningless and deceptive.

  That was before anyone had ever heard of ``subprime lending.''
  Unfortunately, as the use of credit has exploded and as the 
complexity of the credit products offered by lenders has become mind-
boggling, Congress and the Federal Reserve have taken several actions 
since the passage of Truth in Lending to weaken the APR as a tool for 
comparison shopping. Today, many fees can be excluded from the rate 
that is given to borrowers. The APR no longer gives consumers the 
convenient and accurate information it once did.
  This bill would give consumers a way to accurately compare credit 
options, by requiring that the new FAIR calculation be disclosed both 
for open-end credit plans such as credit cards and for closed-end 
credit such as mortgages and payday loans.
  On a related note, I commend my colleague, Senator Jeff Merkley of 
Oregon, who introduced the SAFE Lending Act of 2012 earlier this week. 
I am proud to be an original cosponsor of the bill. The bill would 
require better compliance among lenders within existing laws and 
provide new enforcement measures for offshore lenders or those who 
claim the right to tribal sovereign immunity. These provisions, along 
with further consumer protections offered within his bill, offer much-
needed lending reforms.
  Various Federal and State loopholes allow unscrupulous lenders to 
charge struggling consumers 400 percent annual interest for payday 
loans on average, 300 percent annual interest for car title loans, up 
to 3500 percent annual interest for bank overdraft loans, and triple-
digit rates for online installment loans.
  As Congress continues to address economic challenges facing our 
nation, I urge my colleagues to also consider simple solutions to help 
working families make ends meet. We can help give more money to 
American consumers today without borrowing money that must be repaid 
tomorrow. Let's start by eliminating some of the worst abuses in 
lending by establishing a reasonable fee and interest rate cap.
  I urge my colleagues to support the Protecting Consumers from 
Unreasonable Credit Rates Act.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3452

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Protecting Consumers from 
     Unreasonable Credit Rates Act of 2012''.

     SEC. 2. FINDINGS.

       Congress finds that--
       (1) attempts have been made to prohibit usurious interest 
     rates in America since colonial times;
       (2) at the Federal level, in 2006, Congress enacted a 
     Federal 36 percent annualized usury cap for service members 
     and their families for covered credit products, as defined by 
     the Department of Defense, which curbed payday, car title, 
     and tax refund lending around military bases;
       (3) notwithstanding such attempts to curb predatory 
     lending, high-cost lending persists in all 50 States due to 
     loopholes in State laws, safe harbor laws for specific forms 
     of credit, and the exportation of unregulated interest rates 
     permitted by preemption;
       (4) due to the lack of a comprehensive Federal usury cap, 
     consumers annually pay approximately $23,700,000,000 for 
     high-cost overdraft loans, as much as $8,100,000,000 for 
     storefront and online payday loans, and additional amounts in 
     unreported revenues from bank direct deposit advance loans 
     and high-cost online installment loans;
       (5) cash-strapped consumers pay on average 400 percent 
     annual interest for payday loans, 300 percent annual interest 
     for car title loans, up to 3,500 percent for bank overdraft 
     loans, and triple-digit rates for online installment loans;
       (6) a national maximum interest rate that includes all 
     forms of fees and closes all loopholes is necessary to 
     eliminate such predatory lending; and
       (7) alternatives to predatory lending that encourage small 
     dollar loans with minimal or no fees, installment payment 
     schedules, and affordable repayment periods should be 
     encouraged.

     SEC. 3. NATIONAL MAXIMUM INTEREST RATE.

       The Truth in Lending Act (15 U.S.C. 1601 et seq.) is 
     amended by adding at the end the following:

     ``SEC. 141. MAXIMUM RATES OF INTEREST.

       ``(a) In General.--Notwithstanding any other provision of 
     law, no creditor may make an extension of credit to a 
     consumer with respect to which the fee and interest rate, as 
     defined in subsection (b), exceeds 36 percent.
       ``(b) Fee and Interest Rate Defined.--
       ``(1) In general.--For purposes of this section, the fee 
     and interest rate includes all charges payable, directly or 
     indirectly, incident to, ancillary to, or as a condition of 
     the extension of credit, including--
       ``(A) any payment compensating a creditor or prospective 
     creditor for--
       ``(i) an extension of credit or making available a line of 
     credit, such as fees connected with credit extension or 
     availability such as numerical periodic rates, annual fees, 
     cash advance fees, and membership fees; or
       ``(ii) any fees for default or breach by a borrower of a 
     condition upon which credit was extended, such as late fees, 
     creditor-imposed not sufficient funds fees charged when a 
     borrower tenders payment on a debt with a check drawn on 
     insufficient funds, overdraft fees, and over limit fees;
       ``(B) all fees which constitute a finance charge, as 
     defined by rules of the Bureau in accordance with this title;
       ``(C) credit insurance premiums, whether optional or 
     required; and
       ``(D) all charges and costs for ancillary products sold in 
     connection with or incidental to the credit transaction.
       ``(2) Tolerances.--
       ``(A) In general.--With respect to a credit obligation that 
     is payable in at least 3 fully amortizing installments over 
     at least 90 days, the term `fee and interest rate' does not 
     include--
       ``(i) application or participation fees that in total do 
     not exceed the greater of $30 or, if there is a limit to the 
     credit line, 5 percent of the credit limit, up to $120, if--

       ``(I) such fees are excludable from the finance charge 
     pursuant to section 106 and regulations issued thereunder;
       ``(II) such fees cover all credit extended or renewed by 
     the creditor for 12 months; and
       ``(III) the minimum amount of credit extended or available 
     on a credit line is equal to $300 or more;

       ``(ii) a late fee charged as authorized by State law and by 
     the agreement that does not exceed either $20 per late 
     payment or $20 per month; or
       ``(iii) a creditor-imposed not sufficient funds fee charged 
     when a borrower tenders payment on a debt with a check drawn 
     on insufficient funds that does not exceed $15.
       ``(B) Adjustments for inflation.--The Bureau may adjust the 
     amounts of the tolerances established under this paragraph 
     for inflation over time, consistent with the primary goals of 
     protecting consumers and ensuring that the 36 percent fee and 
     interest rate limitation is not circumvented.
       ``(c) Calculations.--
       ``(1) Open end credit plans.--For an open end credit plan--
       ``(A) the fee and interest rate shall be calculated each 
     month, based upon the sum of

[[Page S5491]]

     all fees and finance charges described in subsection (b) 
     charged by the creditor during the preceding 1-year period, 
     divided by the average daily balance; and
       ``(B) if the credit account has been open less than 1 year, 
     the fee and interest rate shall be calculated based upon the 
     total of all fees and finance charges described in subsection 
     (b)(1) charged by the creditor since the plan was opened, 
     divided by the average daily balance, and multiplied by the 
     quotient of 12 divided by the number of full months that the 
     credit plan has been in existence.
       ``(2) Other credit plans.--For purposes of this section, in 
     calculating the fee and interest rate, the Bureau shall 
     require the method of calculation of annual percentage rate 
     specified in section 107(a)(1), except that the amount 
     referred to in that section 107(a)(1) as the `finance charge' 
     shall include all fees, charges, and payments described in 
     subsection (b)(1) of this section.
       ``(3) Adjustments authorized.--The Bureau may make 
     adjustments to the calculations in paragraphs (1) and (2), 
     but the primary goals of such adjustment shall be to protect 
     consumers and to ensure that the 36 percent fee and interest 
     rate limitation is not circumvented.
       ``(d) Definition of Creditor.--As used in this section, the 
     term `creditor' has the same meaning as in section 702(e) of 
     the Equal Credit Opportunity Act (15 U.S.C. 1691a(e)).
       ``(e) No Exemptions Permitted.--The exemption authority of 
     the Bureau under section 105 shall not apply to the rates 
     established under this section or the disclosure requirements 
     under section 127(b)(6).
       ``(f) Disclosure of Fee and Interest Rate for Credit Other 
     Than Open End Credit Plans.--In addition to the disclosure 
     requirements under section 127(b)(6), the Bureau may 
     prescribe regulations requiring disclosure of the fee and 
     interest rate established under this section.
       ``(g) Relation to State Law.--Nothing in this section may 
     be construed to preempt any provision of State law that 
     provides greater protection to consumers than is provided in 
     this section.
       ``(h) Civil Liability and Enforcement.--In addition to 
     remedies available to the consumer under section 130(a), any 
     payment compensating a creditor or prospective creditor, to 
     the extent that such payment is a transaction made in 
     violation of this section, shall be null and void, and not 
     enforceable by any party in any court or alternative dispute 
     resolution forum, and the creditor or any subsequent holder 
     of the obligation shall promptly return to the consumer any 
     principal, interest, charges, and fees, and any security 
     interest associated with such transaction. Notwithstanding 
     any statute of limitations or repose, a violation of this 
     section may be raised as a matter of defense by recoupment or 
     setoff to an action to collect such debt or repossess related 
     security at any time.
       ``(i) Violations.--Any person that violates this section, 
     or seeks to enforce an agreement made in violation of this 
     section, shall be subject to, for each such violation, 1 year 
     in prison and a fine in an amount equal to the greater of--
       ``(1) 3 times the amount of the total accrued debt 
     associated with the subject transaction; or
       ``(2) $50,000.
       ``(j) State Attorneys General.--An action to enforce this 
     section may be brought by the appropriate State attorney 
     general in any United States district court or any other 
     court of competent jurisdiction within 3 years from the date 
     of the violation, and such attorney general may obtain 
     injunctive relief.''.

     SEC. 4. DISCLOSURE OF FEE AND INTEREST RATE FOR OPEN END 
                   CREDIT PLANS.

       Section 127(b)(6) of the Truth in Lending Act (15 U.S.C. 
     1637(b)(6)) is amended by striking ``the total finance charge 
     expressed'' and all that follows through the end of the 
     paragraph and inserting ``the fee and interest rate, 
     displayed as `FAIR', established under section 141.''.
                                 ______
                                 
      By Mr. HARKIN (for himself, Ms. Mikulski, Mrs. Murray, Mr. 
        Sanders, Mr. Merkley, Mr. Franken, Mr. Blumenthal, Mr. Leahy, 
        Mr. Akaka, Mrs. Boxer, Mr. Wyden, Mr. Durbin, Mr. Schumer, Mr. 
        Lautenberg, Mr. Brown of Ohio, and Mrs. Gillibrand);
  S. 3453. A bill to provide for an increase in the Federal minimum 
wage; to the Committee on Health, Education, Labor, and Pensions.
  Mr. HARKIN. Mr. President, I have come to the floor many times over 
the past couple of years to talk about the decline of the American 
Dream. The American Dream is supposed to be about building a better 
life. If you work hard and play by the rules, you should be able to 
support your family, join the middle class, and provide a brighter 
future for your children. Unfortunately, this dream is nothing more 
than an illusion for millions of hardworking people who are trying to 
get by working in low-wage jobs. They are working hard and playing by 
the rules, but they face declining wages, declining opportunities, and 
declining economic security. Even working full-time, all year round, 
they can't make ends meet, much less join the middle class. That is not 
what America is supposed to be about.
  That is why today I am introducing legislation that has one of the 
simplest and most effective policy solutions for shoring up the wages 
and financial security of our nation's low-wage workers. My bill, the 
Fair Minimum Wage Act of 2012, will raise the minimum wage. I would 
like to recognize my colleague in the House of Representatives, Ranking 
Member on the Education and Workforce Committee, George Miller, who is 
joining me in this effort.
  My bill will do three things: First, it will raise the minimum wage 
to $9.80 per hour in three steps over the course of 2 years. Second, it 
will link the minimum wage in the future to increases in the cost of 
living, through the Consumer Price Index, so that low-wage workers no 
longer fall further and further behind. Third, for the first time in 
more than 20 years, it will raise the minimum wage lags for tipped 
workers, from a paltry $2.13 per hour to a level that is 70 percent of 
the full minimum wage, or around $6.85 per hour. This will be a gradual 
change, accomplished over 5 years, that will give businesses time to 
adjust while providing more fairness for hardworking people who work in 
tipped industries.
  This bill and these raises are long overdue. We all know that working 
Americans' paychecks have been stagnant for decades. But the situation 
is even worse for minimum wage workers. Today the minimum wage lags far 
behind its historic levels. It hasn't kept up with any other indicator 
in our economy, not with costs, or average wages, or our still rapid 
growth in productivity.
  At its peak value in 1968, the minimum wage was worth more than 
$10.50 in today's dollars. That means that the minimum wage has lost 31 
percent of its buying power since the late 1960s. How can we possibly 
allow this to be? Costs have been rising in real terms, on everything 
from food and rent to big-ticket items like health care and a college 
education. But Congress has let the minimum wage languish. The lowest 
wage workers in our society simply cannot afford this.
  Even if we measured the minimum wage against other indicators in our 
economy, it has not kept up. The minimum wage used to be more than half 
of average wages; now it is barely a third. In the 1960s and 1970s, the 
minimum wage kept a family of three above the poverty line, 20 percent 
above it in 1968. But today, the minimum wage lags behind the poverty 
line by 16 percent. And let's not forget that the poverty line is a 
woefully inadequate measure of what families really need by any 
realistic measure. Who in this chamber could support two children on 
$18,000 per year, which is the official poverty line? Yet the minimum 
wage only pays $15,000 a year to someone working full-time who never 
takes a single day off all year. My bill will raise the minimum wage to 
about $20,000 per year, and it will maintain the wage at a level that 
keeps up with rising costs.
  While workers are working longer and harder than ever, their 
paychecks don't reflect that contribution. If the minimum wage had kept 
up with productivity growth since 1968, it would be nearly $22 an hour 
this year; even if it had kept up with just one-quarter of productivity 
growth, it would be $12.25 per hour. So while companies have reaped the 
benefits of all this productivity growth, the people who actually do 
the work have seen none of its value. It has all gone to executive 
management and shareholders. It has gone to profits, not the people who 
do the work.
  There will be tens of millions of people in this country who will 
benefit from this legislation. Twenty-eight million workers will get a 
raise, either directly by the legislation, or indirectly through the 
``trickle up'' effects of a higher wage floor--that is more than a 
fifth of our workforce that will be impacted. Among them, more than 
half are women, and more than four in ten are people of color--both of 
these groups are overrepresented in low-wage work. They are the ones 
who care for our children and elders, who clean our offices and 
factories, who serve us food, who keep our economic engine running. 
These are some of the hardest jobs and

[[Page S5492]]

hardest workers, and yet their pay is simply paltry. We will never have 
fair wages for women or greater racial equality if the minimum wage is 
not a just and fair minimum wage.
  The families of these 28 million workers will also benefit. More than 
21 million children have parents who will get a raise. This will be so 
meaningful to these families. After all, children represent more than a 
third of poor Americans. Nearly half of children, 44 percent, are poor 
or low-income, and even among families with parents working full-time 
year-round, nearly three in ten children are poor or low-income. This 
is largely because wages are much too low to support a family.
  Yet wages aren't low because our economy can't afford them. No. Our 
economic growth is going to profits, not to workers. Inequality is at 
the highest level we've seen since the eve of the Great Depression. 
CEOs are raking in millions--even if their companies are not performing 
well--while low-wage workers are barely able to put food on the table, 
and even then it is often with the help of food stamps. Last year, the 
average CEO earned nearly $13 million. That was after a 23 percent 
raise in 2010 and a 14 percent raise in 2011. Minimum wage workers had 
no raises in those years. But CEOs are getting $13 million a year. That 
is more than $6,200 an hour. A CEO earns more before lunch on his first 
day of work than a minimum wage worker earns in an entire year.
  Some people will criticize this measure, saying it will force 
businesses to lay off workers, and that workers will actually be hurt 
by getting a raise. History proves that these assertions are simply 
wrong. We know from decades of rigorous research that minimum wage 
raises along the lines of what I am proposing do not have negative jobs 
effects--and if there are any effects on jobs, they are small, but 
positive effects. This goes for teenagers, too; study after study 
confirms minimum wage raises do not cause teenage unemployment.
  Indeed, businesses are helped when their workers get a raise because 
raising the minimum wage acts like a stimulus. Businesses will reap 
more in sales when their customers have more money in their pockets, 
and they will save money through increased productivity and morale and 
reduced turnover. My bill will put an extra $40 billion in the hands of 
low-wage workers and their families. We know that these workers don't 
have much if any room for savings--they will go out and spend it, and 
this will benefit the local businesses in their communities. Indeed, 
this extra spending power will boost GDP by more than $25 billion and 
add 100,000 jobs, as increased economic activity ripples through the 
economy.
  Businesses will also save from reduced turnover cost, since turnover 
rates fall when workers earn more money. It can cost thousands of 
dollars to recruit, hire, and train new employees, even for low-skill 
jobs. Of course all businesses would have the same minimum wage, 
meaning no business would be any worse off than a competitor. A raise 
in the minimum wage would also reduce competitive disadvantage faced by 
businesses that already pay a higher wage. These businesses should be 
rewarded, not punished for paying fair wages.
  We must also look at what is happening in our economy. We are 
becoming a low-wage economy. Low-wage jobs are growing faster than 
middle- or high-wage jobs. Over the next decade, the Bureau of Labor 
Statistics estimates that 7 of the 10 occupations with the largest job 
growth will be low-wage jobs. With so much of our economy moving to the 
low end of the wage scale, we must ensure that those wages are 
adequate.
  It is long past time to establish a fair minimum wage in our country. 
It is good for families, good for business and good for our economy. 
Most importantly, it is the right thing to do. People who work hard for 
a living should not have to live in poverty. I am proud to introduce 
this bill today, to raise the minimum wage, and to help tens of 
millions of workers and their families.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record. as follows:

                                S. 3453

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Fair Minimum Wage Act of 
     2012''.

     SEC. 2. MINIMUM WAGE INCREASES.

       (a) Minimum Wage.--
       (1) In general.--Section 6(a)(1) of the Fair Labor 
     Standards Act of 1938 (29 U.S.C. 206(a)(1)) is amended to 
     read as follows:
       ``(1) except as otherwise provided in this section, not 
     less than--
       ``(A) $8.10 an hour, beginning on the first day of the 
     third month that begins after the date of enactment of the 
     Fair Minimum Wage Act of 2012 Act;
       ``(B) $8.95 an hour, beginning 1 year after that first day;
       ``(C) $9.80 an hour, beginning 2 years after that first 
     day; and
       ``(D) beginning on the date that is 3 years after that 
     first day, and annually thereafter, the amount determined by 
     the Secretary pursuant to subsection (h);''.
       (2) Determination based on increase in the consumer price 
     index.--Section 6 of the Fair Labor Standards Act of 1938 (29 
     U.S.C. 206) is amended by adding at the end the following:
       ``(h)(1) Each year, by not later than the date that is 90 
     days before a new minimum wage determined under subsection 
     (a)(1)(D) is to take effect, the Secretary shall determine 
     the minimum wage to be in effect pursuant to this subsection 
     for the subsequent 1-year period. The wage determined 
     pursuant to this subsection for a year shall be--
       ``(A) not less than the amount in effect under subsection 
     (a)(1) on the date of such determination;
       ``(B) increased from such amount by the annual percentage 
     increase in the Consumer Price Index for Urban Wage Earners 
     and Clerical Workers (United States city average, all items, 
     not seasonally adjusted), or its successor publication, as 
     determined by the Bureau of Labor Statistics; and
       ``(C) rounded to the nearest multiple of $0.05.
       ``(2) In calculating the annual percentage increase in the 
     Consumer Price Index for purposes of paragraph (1)(B), the 
     Secretary shall compare such Consumer Price Index for the 
     most recent month, quarter, or year available (as selected by 
     the Secretary prior to the first year for which a minimum 
     wage is in effect pursuant to this subsection) with the 
     Consumer Price Index for the same month in the preceding 
     year, the same quarter in the preceding year, or the 
     preceding year, respectively.''.
       (b) Base Minimum Wage for Tipped Employees.--Section 
     3(m)(1) of the Fair Labor Standards Act of 1938 (29 U.S.C. 
     203(m)(1)) is amended to read as follows:
       ``(1) the cash wage paid such employee, which for purposes 
     of such determination shall be not less than--
       ``(A) for the 1-year period beginning on the first day of 
     the third month that begins after the date of enactment of 
     the Fair Minimum Wage Act of 2012, $3.00 an hour;
       ``(B) for each succeeding 1-year period until the hourly 
     wage under this paragraph equals 70 percent of the wage in 
     effect under section 6(a)(1) for such period, an hourly wage 
     equal to the amount determined under this paragraph for the 
     preceding year, increased by the lesser of--
       ``(i) $0.85; or
       ``(ii) the amount necessary for the wage in effect under 
     this paragraph to equal 70 percent of the wage in effect 
     under section 6(a)(1) for such period, rounded to the nearest 
     multiple of $0.05; and
       ``(C) for each succeeding 1-year period after the year in 
     which the hourly wage under this paragraph first equals 70 
     percent of the wage in effect under section 6(a)(1) for the 
     same period, the amount necessary to ensure that the wage in 
     effect under this paragraph remains equal to 70 percent of 
     the wage in effect under section 6(a)(1), rounded to the 
     nearest multiple of $0.05; and''.
       (c) Publication of Notice.--Section 6 of the Fair Labor 
     Standards Act of 1938 (as amended by subsection (a)) (29 
     U.S.C. 206) is further amended by adding at the end the 
     following:
       ``(i) Not later than 60 days prior to the effective date of 
     any increase in the minimum wage determined under subsection 
     (h) or required for tipped employees in accordance with 
     subparagraph (B) or (C) of section 3(m)(1), as amended by the 
     Fair Minimum Wage Act of 2012, the Secretary shall publish in 
     the Federal Register and on the website of the Department of 
     Labor a notice announcing the adjusted required wage.''.
       (d) Effective Date.--The amendments made by subsections (a) 
     and (b) shall take effect on the first day of the third month 
     that begins after the date of enactment of this Act.

[[Page S5493]]

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